![](\"https:\/\/taxwhatifdoctor.com\/wp-content\/uploads\/Blog-Pic-2023.03.21.png\" "\\"Timing")
<\/a><\/div>Timing Is an Important Part of Tax Planning<\/a><\/span>Have you ever seen a cat on the side of the road that waits until the very last second and then darts across the road in front of traffic? Ever see one that didn\u2019t make it and think, \u201cSome child is going to be very sad soon.\u201d? I always wonder what makes the cat wait until the last second, but then again that\u2019s what most taxpayers seem to do. They wait until February or March with a filing deadline looming and then dash out in front of a tax preparer and beg, \u201cIs there anything we can do to lower this?\u201d\u00a0 Like the cat, perhaps the preparer has an idea and they miss getting hit with the entire bill, but<\/p><\/div><\/li>
<\/a><\/div>Why Do the Wealthy Pay Less Tax than Others?<\/a><\/span>Well, do they or don\u2019t they, actually? Long debated and often manipulated by the media, the topic of the wealthy and taxation has many, many complex points and counterpoints.\u00a0First, when people say that, they often don\u2019t define what kind of tax. The people hearing the comment usually go to federal personal income tax in their mind as TAXES. However, if a wealthy person owns 20 C corporations, with each filing their own tax returns, those C corporations pay their own taxes and unless the wealthy person needed to take a dividend or other distribution, then they could pay zero federal income tax, even though their companies paid potentially millions in taxes themselves. \u00a0 The kinds of taxes people pay depends<\/p><\/div><\/li>
<\/a><\/div>The Tax Planning Void That Costs America a Lot!<\/a><\/span>Many people who do not deal in the tax preparation or planning business think of taxes as something to deal with one day per year. Like Christmas, only not as good. So perhaps more like \u201cGrinch Day.\u201d Nevertheless, it doesn\u2019t get a lot of attention after April. It drifts into the \u201cThank goodness that\u2019s over!\u201d mental space and goes away until the new year. It\u2019s different for self-employed small business owners, as tax related issues are dealt with more often, but it\u2019s still mechanical in nature. \u201cI\u2019ve got to go deposit payroll taxes today\u201d or \u201cI need to send in my 941 quarterly payment this week.\u201d But still, their thoughts are not focused on proactive activities, but more so on<\/p><\/div><\/li>
<\/a><\/div>You Control What You Pay in Tax, it Doesn\u2019t \u201cHappen to You\u201d<\/a><\/span>If you pay attention and plan your tax outcomes proactively, there are many things you can do to reduce your tax bill. But the planning and the resulting activities that you need to engage in to achieve those outcomes are all year-round actions you must take, not just things to do the week before you file. Start by opening your calendar and marking a day each month to spend an hour on your taxes. That\u2019s 12 hours a year. If when you file your taxes those year-round activities saved you $1500, then you were \u201cpaid\u201d $125.00 an hour, which is worthwhile! If you saved $10,000.00 in taxes, that would be $833 per hour. Sign me up for that job! Start<\/p><\/div><\/li>
<\/a><\/div>Understanding Tax Credits<\/a><\/span>When planning ahead, or just engaging in their day to day operations, most business owners at least occasionally think about tax deductions. A business dinner that can be partially deductible, or a new machine that can be depreciated. However, they often don\u2019t think about or plan how to acquire other tax credits, which can often be much more valuable. Tax credits are often transitory, with the benefits increased or reduced from year to year, or sometimes eliminated altogether, only to be brought back again several years later. Over the last few decades we have seen some popular credits renewed or in some cases even made a permanent part of the tax code. Small business owners seem to often not be<\/p><\/div><\/li><\/ul> <\/div>